22 Jun Q1.Identify the opportunities and threats facing the firm
Q1.Identify the opportunities and threats facing the firm
Opportunities for the firm:
? The industry had experienced a prolonged period of strong growth, which was expected to continue into 2001 and beyond primarily due to the service demands associated with the use of the Internet in business (Hoovers Online Network, 2001a).
? According to Standard and Poor’s Industry Survey, the global computer services industry would continue growing at a compound annual rate of 11 percent through 2004. The United States accounted for about 46 percent of the worldwide market for computer services in 1999, a percentage that was expected to remain steady over the next several years.
? The outlook was very good for data processing services. Traditional data processing services had strong growth opportunities. These services include data entry, credit card authorization, billing, and payroll processing.
? Another important trend in this segment (global computer services industry) was the growing proportion of spending on professional services relative to spending in the information technology markets overall, both at the national and international levels.
? In addition, maintaining, supporting, and integrating information technology, computer services, and telecommunications in a multi-vendor environment generate greater revenue.
? Businesses were attempting to take advantage of the Internet’s potential while maintaining security and control over critical business data and information. This created great demand for systems integration and computer consulting to resolve these sometimes divergent goals.
o Top Information Technology Opportunities Worldwide in various fields as following:
o Organizing and utilizing data.
o Aligning IS and corporate goals.
o Connecting electronically to customers, suppliers, and/or partners.
o Integrating systems.
o Developing an electronic business strategy.
o Capitalizing on advances in IT.
o Instituting cross-functional information systems.
o Cutting IS costs.
o Using IT for competitive breakthroughs.
o Improving IS human resources.
Threats to the firm:
? A slowing economy and its potential impact on information technology spending were still possible.
? Increasingly competitive market as management consultants, systems integrators, and systems vendors continued to expand their operations into related technology consulting and outsourcing operations.
? Smaller niche firms had also started to provide more-focused competition in localized markets. The company faced increased competition in the e-business area because many consulting firms established e-business.
? Smaller firms, which are perceived as providing leading-edge knowledge while also being flexible; they are increasingly attracting large corporate clients as well as experienced consultants.
? Specialized Companies in hardware, software, net working have a good ability to build new solutions based on current and future technologies due to their research and development capabilities in their field. In the case of HP, it was equipment; for Oracle and Sybase, it was software, specifically database management software and services.
? Employee Turnover is a major factor, due to variety of reasons better opportunities, nature of work etc.
? Firms exist and provide tough competition for example ADP provides computerized transaction processing, data communications, and information services for specific niche markets. These services are marketed through a network of highly skilled direct sales force resources
? A major impediment to sustained growth was the shortage of computer professionals, including programmers and system designers. This shortage was also significantly increasing the labor costs within this industry.
Q2.Evaluate the competitive position of IBM Global Services in term of the key factors required for success in the professional computer services industry.
The computer services industry includes three broad categories of services: processing services (data entry, credit card authorization,’ billing payroll processing), network services (electronic data interchange services, electronic mail delivery, file transfer, and electronic funds transfer), and professional computer services (technology consulting, custom programming, systems integration, and outsourcing).
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